We are interested in understanding the regulation of enhancer- dependent gene expression in vivo. Specifically, there are two major areas of interest: (1) regulation of gene expression in undifferentiated cells and (2) interaction(s) of protein factors that may effect enhancer-dependent expression. Our studies have focused on the role of DNA binding proteins in the regulation of gene transcription. We have found that a prokaryotic DNA- binding protein can be functional in eukaryotic cells. Specifically, the placement of DNA-binding sites such that the E. coli lac repressor molecule surrounds the SV40 enhancer sequences bidirectionally can negatively modulate the expression of a linked gene. This result suggests certain models that may explain the actions of enhancer sequences.